Alimony laws have varied from state to state for years, making it necessary for couples considering divorce to look into the applicable laws in their state to understand how to fairly address the issue of spousal support. Depending on the nature of the divorce and the laws of the state where a divorce took place, the terms of alimony varied significantly from one couple to the next, but once fair terms were reached, paying spouse's could take some comfort in the tax breaks associated with paying support.
Under the new tax laws recently passed in Congress, this long-standing benefit to paying spouses is no longer applicable, leaving many couples struggling to understand if they can even afford to get divorced if alimony is on the table.
The changes upend decades of established alimony law. Spouses facing the burden of alimony could ease the strain of paying support with tax deductions for the payments, and receiving spouses payed tax on the support as they might any other basic form of income. Now, under the new laws, this fundamental aspect of alimony is no longer present. The loss of these tax breaks may give some couples pause before filing for divorce, because a spouse who bears alimony responsibilities may no longer deduct the payments.
If you and your spouse face a complicated divorce and are unsure how to move forward without financial ruin, it is important to have a nuanced understanding of these changes and the alternatives you have to address your needs. Professional legal counsel ensures that you understand the full scope of your legal options, allowing you to protect your priorities as you move from your marriage into a new season.
Source: CNBC, "Alimony tax changes may scorch divorcing couples," Annie Nova, Feb. 16, 2018